Sunak's Employers' Subsidy

It may be unprecedented in the annals of British economic history, but Rishi Sunak's third budget was just not good enough. For millions of people forced to endure uncertainty because they don't know if their job will survive the crisis, or because they're self-employed or freelancing, or on short-time working and zero hour contracts, the risk of a much reduced income remains the case.

In addition to closing down bars, pubs and other ents venues, the big ticket item in today's press conference is the government's pledge to pick up 80% of employee wages up to £2,500/month for the next three months, with the promise of an extension if necessary. Universal Credit sees its standard allowance rise by £1k, and ditto for Working Tax Credits. And that's it. Nothing for the self-employed and precarious workers, no movement on changing the five week waiting time for UC, and no change to statutory sick pay which remains stuck at £94/week, and still nothing for renters. Sunak hasn't even introduced conditionality as per the Danish model - the inspiration for this approach - beyond expecting companies to not fire staff for the duration of this scheme.

Apart from ignoring millions of people, there are other big issues with the employers' subsidy. For example, small and medium-sized businesses or charities who've had their takings crash through the floor would certainly find the support offered helpful, but that doesn't solve the problem of cash through the door. The £25k payments and interest-free credit lines (now extended to 12 months) are better than nothing, but it merely delays redundancies. 20% of employee wages have to come from somewhere. Additionally, because of the lack of conditionality what is to prevent business that are doing okay from applying? As anyone who's followed the course of of the British economy over the last 10 years, the so-called productivity puzzle of shrinking production but growing employment is down to capital strikes - the failure to invest, thanks to the government's austerity measures sucking demand out of the economy. British big business is sitting on piles of cash, so why should they be paid to carry on like misers when the rest of us have to make sacrifices?

There's also a cash boost here for businesses that have already laid off staff, because these payments are backdated. For example, it was reported one of the most popular eateries in Stoke has closed its doors and laid off all its 40 staff except for the two owners. Like many other businesses this was thanks to a collapse in takings and an inability to sustain the wages bill. However, because claims can be backdated to 1st March they can claim for 80% of the wages paid out since the beginning of the month - a not inconsiderable sum. Consider the boost this provides for businesses shedding hundreds of jobs.

Once again, Sunak is making the wrong choices because the Tories have the wrong priorities. Instead of ramping up orders for ventilators, we get a ramping up of baseless Johnsonian optimism. Instead of support for workers, we see bail outs for capital. Welfare is the government's second priority, its first is the preservation of wage labour and the class system they articulate and defend. Their politics of crisis management is class politics, and by carrying on in this utterly sectional way the misery and despair they're presiding over will become anger and fury before long. Their half-arsed efforts are priming a political bomb set to blow up in their faces, unless Johnson rapidly changes course and matches words with deeds.

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